Expat Life Insurance – Are you really covered
With so many factors to consider when living or working outside your country of birth, some of the obvious elements like international life insurance get overlooked.
Many people moving between countries already have life insurance but fail to realise that the terms and conditions of the policy may invalidate the cover if you become an international worker or expatriate.
Not only do you then waste the money you are paying in premiums, because if the policy is triggered nothing is paid, but you are also exposed to the financial risk you wanted to cover with the policy.
With sensible financial planning, this need not become such a problem.
Anyone of any nationality living outside his or her homeland can buy life insurance.
Several policies are generally available from providers all over the world. As with all life insurance products, the policies come with terms, conditions and add-ons that can make the premium go up or down depending on your personal needs.
The four main options are:
- Level term – these policies have fixed premiums throughout the policy and only pay if the insured person dies while the policy is ‘live’. If the insured person is still alive at the end of the policy term then policy does not pay any return.
- Whole of life – Whole of life policies are guaranteed to pay out on the death of the insured – because the policy lasts for the lifetime of the insured person rather than a fixed term. Whole of life is generally the most expensive life cover because of this pay out guarantee.
- Decreasing term – Often the life cover vehicle running alongside a capital and repayment mortgage because as the debt decreases, the amount of life cover decreases pro rata.
- Annually reviewable life insurance – a life policy that has the terms reviewed every year, and consequently the premiums rise in line with the reviews.
The basic structure of international life insurance policies is the same as policies issued in most countries.
In addition, they will include options to pay premiums and any settlements paid in different currencies.
Why doesn’t the policy I already have cover me as an expat?
Two issues complicate buying insurances as an international worker or an expatriate.
The first is the country where you live and the second is your nationality.
Insurance companies, who obviously want to pay out the least possible to protect their profits, compound the problems.
They employ statisticians called actuaries who analyse data based on ‘mortality’ or death rates and ‘morbidity’ or illness rates.
From this data, they calculate the risk you pose to insure – from where you live, the work you do, your age and medical history they try and project the time of your death and whether you will contract any critical illnesses.
This is fine while you remain in your country of birth, but when you move overseas, these figures become more difficult to predict because mortality and morbidity rates in the country you move to affect the calculations.
To reduce the risk, your home country insurance country will probably void your policy or limit the cover.
The other factor is price – because the UK has low mortality rates, life insurance is cheaper than in some countries with less effective health care and a lower standard of living.
How do I arrange international life insurance?
The best advice is to discuss your life insurance needs with one of our professional qualified advisors. Our advisors are not tied to any institutions and can choose from products across the ‘whole-of-market’ rather than from a selection of preferred providers, this means you will benefit from a cover plan to suit your individual circumstances and at a better price. Consulting with one of our advisors will also help you to discuss the tax implications of any insurance payouts you or your family receive.